Consumer Advocates Urge Court to Reject Proposed Hyundai/Kia MPG Settlement

A class action settlement negotiated by Hyundai and Kia following the companies’ 2012 admission that they low-balled fuel economy numbers for over a dozen 2011–2013 vehicles is structured to prevent consumers from collecting the money they are owed and should be rejected, a group of consumer advocates told a federal court.

A 23-page brief identifying problems with the settlement was filed in the U.S. District Court in Los Angeles on behalf of 13 class members from across the U.S. by their attorneys at Consumer Watchdog and three private law firms — Cuneo Gilbert & LaDuca, Dreyer Babich Buccola Wood & Campora and Cotchett Pitre & McCarthy.

The settlement would require eligible customers to follow “illegible” instructions on a postcard in order to obtain a complicated and poorly worded claim form that “will indisputably discourage many Class Members from pursuing their rights under the Proposed Settlement,” the filing states.

The lawyers supporting the deal “offer no evidence that a claim form is required under the present circumstances” where the companies “have accurate data at their disposal” to automatically issue payments to consumers, the advocates argued in their brief.

The advocates state that court approval of the settlement “would erode public confidence in a crucial device for redressing corporate wrongdoing, the class action process.”

A nearly illegible postcard is the sole manner in which class members will receive direct notice of their rights under the proposed settlement – virtually guaranteeing that most class members will never exercise their rights, even as they will be held to have released their claims, Consumer Watchdog said.

They also argued that the settlement puts forth an “unnecessary and onerous claims process.” Class members must comply with a completely unnecessary, confusing and onerous mail and online claims process that will indisputably discourage many class members from pursuing their rights under the proposed settlement, they argued.

And they said that under the settlement, Hyundai and Kia are responsible for processing class members’ claims against them – a straightforward conflict of interest that incentivizes errors and improper denials of claims by the very same companies that engaged in the misrepresentations to begin with.

And then there is the reversionary settlement — Hyundai and Kia – the wrongdoers – get to keep all the money that consumers do not claim or use.

Judge George H. Wu will hold a hearing on the motion for preliminary approval of the settlement on June 26, 2014 at 9:00 a.m. in federal court in Los Angeles.

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